Ivy League Endowments Smacked Down

Posted on Sep 12, 2009

wordpress.com

Harvard may have beaten Yale in last year’s classic football showdown, but both schools got whipped in the financial game.

These tough economic times have ganged up on the poor, homeowners, investors, students and immigrants. And now comes word that even Harvard and Yale, among the wealthiest schools in the world, have suffered dramatic losses in their endowments over the past year.

The New York Times:

Harvard and Yale disclosed on Thursday just how many billions their endowments had lost in the last year, signaling yet more belt-tightening at the nation’s wealthiest schools.

Harvard’s endowment tumbled 27.3 percent in its latest fiscal year, largely because of problems with its private equity and hedge fund portfolios, lopping off $10 billion and shrinking its portfolio to $26 billion. Taking into consideration donations and spending, the endowment shrank by nearly 30 percent.

Yale also suffered about a 30 percent loss in its endowment, to about $16 billion, the university’s president disclosed in a letter Thursday, adding that final figures on performance were still being compiled.

“We want to alert you to the fact that another round of reductions will be necessary,” Yale’s president, Richard C. Levin, wrote in what he called a budget update to the Yale community praising the cost-cutting that had already occurred.

Sounds like their fund managers got the same “itch” as everyone else on Wall Street. You would think these guys would be a bit more cautious with the school’s money but I guess not. Shows that greed can infect even the most educated. Maybe they will learn from this but I doubt it. Wouldn’t be surprised to learn that they are investing in hedge funds again and derivatives.

...largely because of problems with its private equity and hedge fund portfolios…

Thank God they weren’t invested with Madoff. If it was Alumni that were handling their investments, they may need to reconsider their Curriculum. Perhaps, they should consider teaching Austrian Economics .